APACHE CORP false 0000006769 0000006769 2021-02-24 2021-02-24

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 24, 2021

 

 

APACHE CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   1-4300   41-0747868

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

2000 Post Oak Boulevard

Suite 100

Houston, Texas 77056-4400

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (713) 296-6000

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, $0.625 par value   APA   Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


The information in this Current Report on Form 8-K, including Exhibit 99.1 furnished herewith, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of Section 18, and shall not be incorporated by reference in any filing under the Securities Act or the Exchange Act, except as set forth by specific reference in such filing.

 

Item 2.02.

Results of Operations and Financial Condition.

On February 24, 2021, Apache Corporation issued a press release announcing financial and operating results for the fiscal quarter and year ended December 31, 2020. The full text of the press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.

 

Item 9.01.

Financial Statements and Exhibits.

 

(d)

Exhibits.

 

Exhibit
No.

  

Description

99.1    Press Release of Apache Corporation dated February 24, 2021.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document).


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    APACHE CORPORATION
Date: February 25, 2021     By:  

/s/ Rebecca A. Hoyt

      Rebecca A. Hoyt
      Senior Vice President, Chief Accounting Officer, and Controller
      (Principal Accounting Officer)

Exhibit 99.1

 

LOGO    NEWS RELEASE

Apache Corporation Announces Fourth-Quarter and Full-Year 2020

Financial and Operational Results

Fourth-Quarter Highlights

 

   

Reported production of 411,000 barrels of oil equivalent (BOE) per day; adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 365,000 BOE per day;

 

   

Delivered net cash from operating activities of $498 million and adjusted EBITDAX of $630 million;

 

   

Exceeded fourth quarter adjusted production guidance; delivered upstream capital investment and LOE below guidance; and

 

   

Continued exploration success with three oil discoveries in Suriname, Egypt and North Sea at Keskesi, Tayim-North and Losgann prospects, respectively.

Full-Year 2020 Highlights

 

   

Responded quickly and decisively to the COVID-19 pandemic, successfully protected employees, minimized operational disruptions and preserved the balance sheet;

 

   

Decreased upstream capital investment by 58% year over year; achieved annual run-rate cost savings associated with organizational redesign in excess of $400 million;

 

   

Achieved a 100% success rate on Block 58 exploration drilling campaign offshore Suriname;

 

   

Significantly improved short-term debt profile by reducing Apache bond maturities to only $337 million prior to November 2025; and

 

   

Increased ESG short-term incentive compensation weighting from 10% to 20% and refined our focus areas to air, water, communities and people.

2021 Outlook

 

   

Planning 2021 upstream capital investment budget of $1.1 billion, representing a measured increase of 11% from 2020 actuals; program expected to deliver substantial free cash flow at current strip prices;

 

   

Projecting a modest 4Q 2020 to 4Q 2021 decline in adjusted oil production of approximately 1%; and

 

   

Established compensation-linked ESG goals tied to emissions and water-use targets, including a goal to eliminate routine U.S. onshore flaring by the end of 2021.

HOUSTON, Feb. 24, 2021 – Apache Corporation (Nasdaq: APA) today announced its financial and operational results for the fourth-quarter and full-year 2020.

Apache reported net income attributable to common stock of $10 million, or on a fully diluted basis, a loss of $16 million or $0.04 per share during the fourth-quarter 2020. When adjusted for certain items that impact the comparability of results, Apache’s fourth-quarter loss totaled $20 million or $0.05 on a diluted share basis. Net cash provided by operating activities in the fourth quarter was $498 million, and adjusted EBITDAX was $630 million.

 

LOGO


APACHE CORPORATION ANNOUNCES FOURTH-QUARTER AND FULL-YEAR 2020

FINANCIAL AND OPERATIONAL RESULTS

— PAGE 2 of 5

 

For the full-year 2020, Apache reported a loss of $4.9 billion, or $12.86 per diluted common share. On an adjusted basis, Apache’s 2020 loss totaled $407 million or $1.08 per diluted common share. Net cash provided by operating activities was $1.4 billion, and adjusted EBITDAX was $2.2 billion.

“Apache’s fourth quarter was a positive conclusion to a challenging year. Commodity prices held firm, and we executed well on our production, capital spending and costs objectives while also delivering promising exploration results internationally,” said John J. Christmann IV, Apache’s chief executive officer and president.

“Apache acted quickly and decisively in the face of the extreme market conditions early in 2020. Within three days of the March 9 oil price crash, we took aggressive and necessary measures to protect our financial position. As a result, we were able to absorb significant revenue losses relative to our original plan without further leveraging our balance sheet,” continued Christmann. “We exceeded our cost reduction goals while continuing to deliver excellent employee health, safety and environmental performance. I’m especially proud of our team’s swift response to the pandemic. To date, we have had no known cases of a COVID-19 transmission from one Apache employee or contractor to another.

“It was also a banner year on the exploration front, as we announced three discoveries offshore Suriname, followed by a fourth discovery announced in January 2021, achieving a 100% success rate on Block 58 to date. We look forward to a continuation of the exploration program, as well as an appraisal program, which is now underway.”

ESG Focus

During the year, Apache developed and implemented robust COVID-19 employee safety protocols, provided pandemic assistance to the communities in which it operates and advanced diversity and inclusion programs. The company also enhanced its greenhouse gas data collection processes, expanded disclosures to more closely align with the Task Force on Climate-related Financial Disclosures (TCFD), and increased ESG-related short-term incentive compensation weighting from 10% to 20%.


APACHE CORPORATION ANNOUNCES FOURTH-QUARTER AND FULL-YEAR 2020

FINANCIAL AND OPERATIONAL RESULTS

— PAGE 3 of 5

 

2021 Capital Budget and Outlook

In 2021, Apache plans to invest $1.1 billion in upstream oil and gas capital, approximately $200 million for exploration and $900 million for production and development activities. This capital program will be more than fully funded by internally generated cash flow under an assumed price deck of $45 WTI oil and $3.00 Henry Hub natural gas.

“Our strategic approach remains centered around capital discipline and flexibility. We have established a 2021 capital plan that prioritizes generating free cash flow for debt reduction,” Christmann said. “We will continue to aggressively manage our cost structure, focus on long-term returns over short-term growth, continuously progress our ESG efforts, and advance our global exploration activities, most notably offshore Suriname.”

Year-End 2020 Proved Reserves

Worldwide estimated proved reserves totaled 874 million BOE at year-end 2020. More than 91% of Apache’s estimated proved reserves at year-end 2020 were classified as proved developed. During the year, Apache added approximately 78 million BOE in field extensions and discoveries. Production and divestitures reduced proved reserves by 161 million and 9.6 million BOE, respectively. Negative price revisions, partially offset by positive performance revisions, further reduced proved reserves by 45 million BOE.

Conference Call

Apache will host a conference call to discuss its fourth-quarter and full-year 2020 results at 10 a.m. Central time, Thursday, Feb. 25. The conference call will be webcast from Apache’s website at www.apachecorp.com and investor.apachecorp.com, and the webcast replay will be archived there as well. The conference call will also be available for playback by telephone for one week beginning at approximately 4 p.m. Central time Feb. 25. The number for the replay is 855-859-2056 or 404-537-3406 for international calls. The conference access code is 7773126. Sign up for email alerts to be reminded of the webcast at investor.apachecorp.com/alerts/email-alerts-subscription.


APACHE CORPORATION ANNOUNCES FOURTH-QUARTER AND FULL-YEAR 2020

FINANCIAL AND OPERATIONAL RESULTS

— PAGE 4 of 5

 

About Apache

Apache Corporation is an oil and gas exploration and production company with operations in the United States, Egypt and the United Kingdom and exploration activities offshore Suriname. Apache posts announcements, operational updates, investor information and all press releases on its website, www.apachecorp.com. Specific information concerning Suriname, ESG performance and other investor-related topics are posted at investor.apachecorp.com.

Additional Information

Additional information follows, including reconciliations of adjusted earnings, adjusted EBITDAX, upstream capital investment and net debt (non-GAAP financial measures) to GAAP measures and information regarding adjusted production. Apache’s quarterly supplement is available at www.apachecorp.com/financialdata.

Non-GAAP Financial Measures

Apache’s financial information includes information prepared in conformity with generally accepted accounting principles (GAAP) as well as non-GAAP financial information. It is management’s intent to provide non-GAAP financial information to enhance understanding of our consolidated financial information as prepared in accordance with GAAP. Adjusted earnings, adjusted EBITDAX, upstream capital investment and net debt are non-GAAP measures. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “continues,” “could,” “estimates,” “expects,” “guidance,” “may,” “might,” “outlook,” “possibly,” “potential,” “projects,” “prospects,” “should,” “will,” “would,” and similar references to future periods, but the absence of these words does not mean that a statement is not forward-looking. These statements include, but are not limited to, statements about future plans, expectations and objectives for Apache’s operations, including statements about our capital plans, drilling plans, production expectations, asset sales, and monetizations. While forward-looking statements are


APACHE CORPORATION ANNOUNCES FOURTH-QUARTER AND FULL-YEAR 2020

FINANCIAL AND OPERATIONAL RESULTS

— PAGE 5 of 5

 

based on assumptions and analyses made by us that we believe to be reasonable under the circumstances, whether actual results and developments will meet our expectations and predictions depend on a number of risks and uncertainties which could cause our actual results, performance, and financial condition to differ materially from our expectations. See “Risk Factors” in our 2019 Form 10-K and in our quarterly reports on Form 10-Q filed, and 2020 Form 10-K when filed, with the Securities and Exchange Commission (“SEC”) for a discussion of risk factors that affect our business. Any forward-looking statement made by Apache in this news release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. Apache undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future development or otherwise, except as may be required by law.

Cautionary Note to Investors

The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable, and possible reserves that meet the SEC’s definitions for such terms. Apache may use certain terms in this news release, such as “resources,” “potential resources,” “resource potential,” “estimated net reserves,” “recoverable reserves,” and other similar terms that the SEC guidelines strictly prohibit Apache from including in filings with the SEC. Such terms do not take into account the certainty of resource recovery, which is contingent on exploration success, technical improvements in drilling access, commerciality and other factors, and are therefore not indicative of expected future resource recovery and should not be relied upon. Investors are urged to consider carefully the disclosure in Apache’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019 (and Apache’s Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2020, when filed) available from Apache at www.apachecorp.com or by writing Apache at: 2000 Post Oak Blvd., Suite 100, Houston, TX 77056 (Attn: Corporate Secretary). You can also obtain this report from the SEC by calling 1-800-SEC-0330 or from the SEC’s website at www.sec.gov.

Contacts

Investor: (281) 302-2286 Gary Clark

Media: (713) 296-7276 Phil West

Website: www.apachecorp.com

APA-F

-end-


APACHE CORPORATION

STATEMENT OF CONSOLIDATED OPERATIONS

(Unaudited)

(In millions, except per share data)

 

     For the Quarter     For the Year Ended  
     Ended December 31,     Ended December 31,  
     2020     2019     2020     2019  

REVENUES AND OTHER:

        

Oil, natural gas, and natural gas liquids production revenues

        

Oil revenues

   $ 776     $ 1,316     $ 3,106     $ 5,230  

Natural gas revenues

     181       188       598       678  

Natural gas liquids revenues

     101       121       333       407  
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,058       1,625       4,037       6,315  

Purchased oil and gas sales

     161       104       398       176  
  

 

 

     

 

 

   

 

 

 

Total revenues

     1,219       1,729       4,435       6,491  

Derivative instrument gain (loss), net

     39       5       (223     (35

Gain on divestitures, net

     8       23       32       43  

Other, net

     23       21       64       54  
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,289       1,778       4,308       6,553  
  

 

 

   

 

 

   

 

 

   

 

 

 

OPERATING EXPENSES:

        

Lease operating expenses

     269       343       1,127       1,447  

Gathering, processing and transmission

     68       76       274       306  

Purchased oil and gas costs

     150       82       357       142  

Taxes other than income

     33       66       123       207  

Exploration

     87       585       274       805  

General and administrative

     76       83       290       406  

Transaction, reorganization and separation

     10       33       54       50  

Depreciation, depletion and amortization:

        

Oil and gas property and equipment

     359       676       1,643       2,512  

Other assets

     31       45       129       168  

Asset retirement obligation accretion

     28       27       109       107  

Impairments

     9       2,700       4,501       2,949  

Financing costs, net

     99       97       267       462  
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,219       4,813       9,148       9,561  
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS) BEFORE INCOME TAXES

     70       (3,035     (4,840     (3,008

Current income tax provision

     56       146       176       660  

Deferred income tax provision (benefit)

     (41     66       (112     14  
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS

     55       (3,247     (4,904     (3,682

Net income (loss) attributable to noncontrolling interest—Egypt

     17       42       (121     167  

Net income (loss) attributable to noncontrolling interest—Altus

     8       (329     1       (334

Net income attributable to Altus Preferred Unit limited partners

     20       16       76       38  
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK

   $ 10     $  (2,976   $  (4,860   $  (3,553
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS) PER COMMON SHARE:

        

Basic

   $ 0.03     $  (7.89 )   $  (12.86   $  (9.43 )

Diluted

   $  (0.04   $ (7.89   $  (12.86   $  (9.43 )

WEIGHTED-AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:

        

Basic

     378       377       378       377  

Diluted

     378       377       378       377  

DIVIDENDS DECLARED PER COMMON SHARE

   $  0.025     $ 0.25     $ 0.10     $ 1.00  

 

Page 1


APACHE CORPORATION

PRODUCTION INFORMATION

 

     For the Quarter Ended      % Change     For the Year Ended  
     December 31,
2020
     September 30,
2020
     December 31,
2019
     4Q20 to
3Q20
    4Q20 to
4Q19
    December 31,
2020
     December 31,
2019
 

OIL VOLUME—Barrels per day

                  

United States

     73,946        83,178        108,430        -11     -32     88,249        105,051  

Egypt (1, 2)

     69,351        79,194        79,119        -12     -12     75,384        84,617  

North Sea

     50,525        48,755        50,226        4     1     50,386        49,746  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     119,876        127,949        129,345        -6     -7     125,770        134,363  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total (1)

     193,822        211,127        237,775        -8     -18     214,019        239,414  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

NATURAL GAS VOLUME—Mcf per day

                  

United States

     533,158        597,686        658,395        -11     -19     561,731        639,580  

Egypt (1, 2)

     275,663        286,744        275,811        -4     0     274,175        285,972  

North Sea

     56,883        53,137        63,681        7     -11     57,464        54,642  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     332,546        339,881        339,492        -2     -2     331,639        340,614  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total (1)

     865,704        937,567        997,887        -8     -13     893,370        980,194  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

NGL VOLUME—Barrels per day

                  

United States

     70,170        75,266        80,405        -7     -13     74,136        68,381  

Egypt (1, 2)

     581        611        788        -5     -26     754        931  

North Sea

     1,901        1,976        1,920        -4     -1     1,936        1,739  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     2,482        2,587        2,708        -4     -8     2,690        2,670  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total (1)

     72,652        77,853        83,113        -7     -13     76,826        71,051  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

BOE per day

                  

United States

     232,975        258,058        298,567        -10     -22     256,007        280,029  

Egypt (1, 2)

     115,876        127,595        125,875        -9     -8     121,834        133,209  

North Sea

     61,907        59,588        62,760        4     -1     61,899        60,592  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International (1)

     177,783        187,183        188,635        -5     -6     183,733        193,801  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total (1)

     410,758        445,241        487,202        -8     -16     439,740        473,830  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total excluding noncontrolling interests

     372,058        402,615        445,209        -8     -16     399,026        429,377  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

(1) Includes net production volumes attributed to our noncontrolling partner in Egypt below:

 

Oil (b/d)

     23,167        26,459        26,384            25,206        28,220  

Gas (Mcf/d)

     92,036        95,776        92,075            91,540        95,539  

NGL (b/d)

     194        204        263            251        310  

BOE per day

     38,700        42,626        41,993        -9     -8     40,714        44,453  

(2) Egypt Gross Production

                  

Oil (b/d)

     141,251        159,941        185,704            164,104        193,886  

Gas (Mcf/d)

     617,465        649,566        677,819            641,069        708,682  

NGL (b/d)

     1,115        1,175        1,462            1,429        1,722  

BOE per day

     245,277        269,377        300,136        -9     -18     272,378        313,722  

 

Page 2


APACHE CORPORATION

ADJUSTED PRODUCTION INFORMATION

Adjusted production excludes certain items that management believes affect the comparability of operating results for the periods presented. Adjusted production excludes production attributable to 1) noncontrolling interest in Egypt and 2) Egypt tax barrels. Management uses adjusted production to evaluate the company’s operational trends and performance and believes it is useful to investors and other third parties.

 

     For the Quarter Ended      % Change     For the Year Ended  
     December 31,      September 30,      December 31,      4Q20 to
3Q20
    4Q20 to
4Q19
    December 31,      December 31,  
     2020      2020      2019     2020      2019  

OIL VOLUME - Barrels per day

                  

United States

     73,946        83,178        108,430        -11     -32     88,249        105,051  

Egypt

     41,229        46,198        42,120        -11     -2     46,581        44,773  

North Sea

     50,525        48,755        50,226        4     1     50,386        49,746  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     91,754        94,953        92,346        -3     -1     96,967        94,519  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     165,700        178,131        200,776        -7     -17     185,216        199,570  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

NATURAL GAS VOLUME - Mcf per day

                  

United States

     533,158        597,686        658,395        -11     -19     561,731        639,580  

Egypt

     171,192        175,667        159,242        -3     8     173,694        165,159  

North Sea

     56,883        53,137        63,681        7     -11     57,464        54,642  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     228,075        228,804        222,923        0     2     231,158        219,801  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     761,233        826,490        881,318        -8     -14     792,889        859,381  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

NGL VOLUME - Barrels per day

                  

United States

     70,170        75,266        80,405        -7     -13     74,136        68,381  

Egypt

     387        407        474        -5     -18     503        550  

North Sea

     1,901        1,976        1,920        -4     -1     1,936        1,739  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     2,288        2,383        2,394        -4     -4     2,439        2,289  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     72,458        77,649        82,799        -7     -12     76,575        70,670  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

BOE per day

                  

United States

     232,975        258,058        298,567        -10     -22     256,007        280,029  

Egypt

     70,148        75,883        69,134        -8     1     76,032        72,850  

North Sea

     61,907        59,588        62,760        4     -1     61,899        60,592  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

International

     132,055        135,471        131,894        -3     0     137,931        133,442  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

Total

     365,030        393,529        430,461        -7     -15     393,938        413,471  
  

 

 

    

 

 

    

 

 

        

 

 

    

 

 

 

 

Page 3


APACHE CORPORATION

PRICE INFORMATION

 

     For the Quarter Ended      For the Year Ended  
     December 31,      September 30,      December 31,      December 31,      December 31,  
     2020      2020      2019      2020      2019  

AVERAGE OIL PRICE PER BARREL

              

United States

   $  41.05      $  39.60      $  56.26      $  37.42      $  54.71  

Egypt

     43.82        41.51        63.11        39.95        63.76  

North Sea

     45.45        42.10        64.07        42.88        65.10  

International

     44.52        41.73        63.48        41.13        64.25  

Total

     43.21        40.88        60.19        39.60        60.05  

AVERAGE NATURAL GAS PRICE PER MCF

              

United States

   $ 1.68      $ 1.40      $ 1.50      $ 1.22      $ 1.26  

Egypt

     2.77        2.82        2.86        2.79        2.83  

North Sea

     5.40        2.58        4.30        3.19        4.48  

International

     3.22        2.78        3.13        2.86        3.09  

Total

     2.27        1.90        2.05        1.83        1.90  

AVERAGE NGL PRICE PER BARREL

              

United States

   $ 14.45      $ 13.06      $ 15.00      $ 11.21      $ 14.95  

Egypt

     34.46        25.88        36.47        27.83        33.87  

North Sea

     33.38        27.08        44.22        29.73        36.83  

International

     33.63        26.80        41.97        29.20        35.80  

Total

     15.11        13.51        15.88        11.84        15.74  

 

Page 4


APACHE CORPORATION

SUPPLEMENTAL FINANCIAL INFORMATION

(Unaudited)

(In millions)

SUMMARY EXPLORATION EXPENSE INFORMATION

 

     For the Quarter Ended      For the Year Ended  
     December 31,      December 31,  
     2020             2019      2020      2019  

Unproved leasehold impairments

   $ 15         $ 545      $ 101      $ 619  

Dry hole expense

     58           24        110        57  

Geological and geophysical expense

     6           5        20        59  

Exploration overhead and other

     8           11        43        70  
  

 

 

       

 

 

    

 

 

    
   $ 87         $ 585      $ 274      $ 805  
  

 

 

       

 

 

    

 

 

    

SUMMARY CASH FLOW INFORMATION

 

     For the Quarter Ended
December 31,
    For the Year Ended
December 31,
 
     2020            2019     2020            2019  

Net cash provided by operating activities

   $ 498        $ 778     $ 1,388        $ 2,867  
  

 

 

      

 

 

   

 

 

      

 

 

 

Additions to upstream oil and gas property

     (196        (580     (1,274        (2,634

Additions to Altus gathering, processing, and transmission facilities

     (1        (33     (28        (327

Contributions to Altus equity method interests

     (41        (164     (327        (501

Acquisition of Altus equity method interests

     —            —         —            (671

Proceeds from sale of oil and gas properties

     34          128       166          718  

Other, net

     14          (14     (3        (31
  

 

 

      

 

 

   

 

 

      

 

 

 

Net cash used in investing activities

   $ (190      $ (663   $ (1,466      $ (3,446
  

 

 

      

 

 

   

 

 

      

 

 

 

Apache debt borrowings and payments, net

     (200        —         145          (161

Altus credit facility borrowings

     44          161       228          396  

Distributions to noncontrolling interest - Egypt

     (30        (70     (91        (305

Distributions to Altus Preferred Unit limited partners

     (12        —         (23        —    

Redeemable noncontrolling interest - Altus Preferred Unit limited partners

     —            —         —            611  

Dividends paid

     (10        (94     (123        (376

Other

     —            (28     (43        (53
  

 

 

      

 

 

   

 

 

      

 

 

 

Net cash provided by financing activities

   $ (208      $ (31   $ 93        $ 112  
  

 

 

      

 

 

   

 

 

      

 

 

 

SUMMARY BALANCE SHEET INFORMATION

 

     December 31,     December 31,  
     2020     2019  

Cash and cash equivalents

   $ 262     $ 247  

Other current assets

     1,584       1,714  

Property and equipment, net

     8,819       14,158  

Other assets

     2,081       1,988  
  

 

 

   

 

 

 

Total assets

   $ 12,746     $ 18,107  
  

 

 

   

 

 

 

Current debt- Apache *

   $ 2     $ 1  

Current debt - Altus

     —         10  

Current liabilities

     1,306       1,844  

Long-term debt - Apache *

     8,146       8,159  

Long-term debt - Altus

     624       396  

Deferred credits and other noncurrent liabilities

     2,705       2,677  

Redeemable noncontrolling interest - Altus Preferred Unit limited partners

     608       555  

Apache shareholders’ equity (deficit)

     (1,639     3,255  

Noncontrolling interest - Egypt

     925       1,137  

Noncontrolling interest - Altus

     69       73  
  

 

 

   

 

 

 

Total Liabilities and equity

   $ 12,746     $ 18,107  
  

 

 

   

 

 

 

Common shares outstanding at end of period

     377       377  

 

*

Excludes Altus

 

Page 5


APACHE CORPORATION

NON-GAAP FINANCIAL MEASURES

(In millions, except per share data)

Reconciliation of Net cash provided by operating activities to Adjusted EBITDAX

Management believes EBITDAX, or earnings before income tax expense, interest expense, depreciation, amortization and exploration expense is a widely accepted financial indicator, and useful for investors, to assess a company’s ability to incur and service debt, fund capital expenditures, and make distributions to shareholders. We define adjusted EBITDAX, a non-GAAP financial measure, as EBITDAX adjusted for certain items presented in the accompanying reconciliation. Management uses adjusted EBITDAX to evaluate our ability to fund our capital expenditures, debt services and other operational requirements and to compare our results from period to period by eliminating the impact of certain items that management does not consider to be representative of the Company’s on-going operations. Management also believes adjusted EBITDAX facilitates investors and analysts in evaluating and comparing EBITDAX from period to period by eliminating differences caused by the existence and timing of certain operating expenses that would not otherwise be apparent on a GAAP basis. However, our presentation of adjusted EBITDAX may not be comparable to similar measures of other companies in our industry.

 

     For the Quarter Ended     For the Year Ended  
     December 31,     September 30,     December 31,     December 31,  
     2020     2020     2019     2020     2019  

Net cash provided by operating activities

   $  498     $  304     $ 778     $  1,388     $  2,867  

Adjustments:

          

Exploration expense other than dry hole expense and unproved leasehold impairments

     14       17       16       63       129  

Current income tax provision

     56       58       146       176       660  

Other adjustments to reconcile net income to net cash provided by operating activities

     (57     (31     (15     (102     (50

Changes in operating assets and liabilities

     2       97       42       186       3  

Financing costs, net

     107       111       97       427       387  

Transaction, reorganization & separation costs

     10       7       33       54       50  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDAX (Non-GAAP)

   $ 630     $ 563     $  1,097     $ 2,192     $ 4,046  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of Income attributable to common stock to Adjusted earnings

Our presentation of adjusted earnings and adjusted earnings per share are non-GAAP measures because they exclude the effect of certain items included in Income Attributable to Common Stock. Management believes that adjusted earnings and adjusted earnings per share provides relevant and useful information, which is widely used by analysts, investors and competitors in our industry as well as by our management in assessing the Company’s operational trends and comparability of results to our peers.

Management uses adjusted earnings and adjusted earnings per share to evaluate our operating and financial performance because it eliminates the impact of certain items that management does not consider to be representative of the Company’s on-going business operations. As a performance measure, adjusted earnings may be useful to investors in facilitating comparisons to others in the Company’s industry because certain items can vary substantially in the oil and gas industry from company to company depending upon accounting methods, book value of assets, capital structure and asset sales and other divestitures, among other factors. Management believes excluding these items facilitates investors and analysts in evaluating and comparing the underlying operating and financial performance of our business from period to period by eliminating differences caused by the existence and timing of certain expense and income items that would not otherwise be apparent on a GAAP basis. However, our presentation of adjusted earnings and adjusted earnings per share may not be comparable to similar measures of other companies in our industry.

 

     For the Quarter Ended     For the Quarter Ended  
     December 31, 2020     December 31, 2019  
     Before     Tax     After     Diluted     Before     Tax     After     Diluted  
     Tax     Impact     Tax     EPS     Tax     Impact     Tax     EPS  

Net income (loss) including noncontrolling interests (GAAP)

   $ 70     $  (15   $ 55     $ 0.15     $  (3,035   $  (212   $  (3,247   $  (8.61

Income (loss) attributable to noncontrolling interests

     37       (12     25       0.07       (191     (96     (287     (0.77

Income attributable to Altus preferred unit limited partner

     20       —         20       0.05       16       —         16       0.05  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to common stock—   Basic

     13       (3     10       0.03       (2,860     (116     (2,976     (7.89

Effect of dilutive securities **

     (26     —         (26     (0.07     —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to common stock—   Diluted

     (13     (3     (16     (0.04     (2,860     (116     (2,976     (7.89

Adjustments: *

                

Asset and unproved leasehold impairments

     24       (5     19       0.05       3,245       (682     2,563       6.78  

Noncontrolling interest impact on Altus impairments

     —         —         —         —         (269     57       (212     (0.56

Noncontrolling interest & tax barrel impact on Egypt adjustments

     (1     —         (1     —         —         —         —         —    

Valuation allowance and other tax adjustments

     —         (7     (7     (0.01     —         655       655       1.74  

Gain on extinguishment of debt

     (8     2       (6     (0.02     —         —         —         —    

Unrealized derivative instrument gain, net

     (55     11       (44     (0.12     (8     1       (7     (0.02

Noncontrolling interest on Altus preferred units embedded derivative

     8       (1     7       0.02       (1     —         (1     —    

Effect of dilutive securities **

     26       —         26       0.07       —         —         —         —    

Transaction, reorganization & separation costs

     10       (2     8       0.02       33       (7     26       0.07  

(Gain)/loss on divestitures, net

     (8     1       (7     (0.02     (23     5       (18     (0.04

Drilling contract termination charges

     1       —         1       —         —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted earnings (Non-GAAP)

   $ (16   $ (4   $ (20   $ (0.05   $ 117     $ (87   $ 30     $ 0.08  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     For the Year Ended     For the Year Ended  
     December 31, 2020     December 31, 2019  
     Before     Tax     After     Diluted     Before     Tax     After     Diluted  
     Tax     Impact     Tax     EPS     Tax     Impact     Tax     EPS  

Net loss including noncontrolling interests (GAAP)

   $  (4,840   $
 
 
(64
 
  $  (4,904   $  (12.98   $  (3,008   $  (674   $  (3,682   $  (9.77

Loss attributable to noncontrolling interest

     (83     (37     (120     (0.32     44       (211     (167     (0.44

Income attributable to Altus preferred unit limited partner

     76       —         76       0.20       38       —         38       0.10  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to common stock - Basic

     (4,833     (27     (4,860     (12.86     (3,090     (463     (3,553     (9.43

Effect of dilutive securities **

     —         —         —         —         —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to common stock - Diluted

     (4,833     (27     (4,860     (12.86     (3,090     (463     (3,553     (9.43

Adjustments: *

                

Asset and unproved leasehold impairments

     4,602       (856     3,746       9.90       3,568       (750     2,818       7.45  

Noncontrolling interest impact on Altus impairments

     —         —         —         —         (271     57       (214     (0.56

Noncontrolling interest & tax barrel impact on Egypt adjustments

     (172     (7     (179     (0.47     —         —         —         —    

Valuation allowance and other tax adjustments

     —         925       925       2.45       —         854       854       2.27  

(Gain)/Loss on extinguishment of debt

     (160     34       (126     (0.33     75       (16     59       0.16  

Unrealized derivative instrument losses, net

     87       (18     69       0.19       44       (11     34       0.10  

Noncontrolling interest on Altus preferred units embedded derivative

     (8     2       (6     (0.02     (1     —         (1     (0.01

Transaction, reorganization & separation costs

     54       (12     42       0.11       50       (11     39       0.11  

Gain on divestitures, net

     (32     9       (23     (0.06     (43     9       (34     (0.09

Drilling contract termination charges

     7       (2     5       0.01       —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Earnings (Non-GAAP)

   $ (455   $ 48     $ (407   $ (1.08   $ 332     $  (331   $ 2     $ 0.00  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

*

The income tax effect of the reconciling items are calculated based on the statutory rate of the jurisdiction in which the discrete item resides.

**

The assumed conversion of Altus’ Preferred Unit limited partner is primarily associated with unrealized gains on the Preferred Unit embedded derivative. These amounts are antidilutive for the year ended 2020 and on an adjusted fourth quarter basis.

 

Page 6


APACHE CORPORATION

NON-GAAP FINANCIAL MEASURES

(In millions)

Reconciliation of debt to net debt

Net debt, or outstanding debt obligations less cash and cash equivalents, is a non-GAAP financial measure. Management uses net debt as a measure of the Company’s outstanding debt obligations that would not be readily satisfied by its cash and cash equivalents on hand. The Altus Midstream LP credit facility is unsecured and is not guaranteed by Apache or any of Apache’s other subsidiaries.

 

     December 31, 2020      December 31, 2019  
     Apache      Altus      Apache      Apache      Altus      Apache  
     Upstream      Midstream      Consolidated      Upstream      Midstream      Consolidated  

Current debt

   $ 2      $ —        $ 2      $ 1      $ 10      $ 11  

Long-term debt

     8,146        624        8,770        8,159        396        8,555  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total debt

     8,148        624        8,772        8,160        406        8,566  

Cash and cash equivalents

     238        24        262        241        6        247  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net debt

   $  7,910      $  600      $  8,510      $  7,919      $  400      $  8,319  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Reconciliation of Costs incurred to Upstream capital investment

Management believes the presentation of upstream capital investments is useful for investors to assess Apache’s expenditures related to our upstream capital activity. We define capital investments as costs incurred for oil and gas activities, adjusted to exclude asset retirement obligation revisions and liabilities incurred, capitalized interest, and certain exploration expenses, while including amounts paid during the period for abandonment and decommissioning expenditures. Upstream capital expenditures attributable to a one-third noncontrolling interest in Egypt are also excluded. Management believes this provides a more accurate reflection of Apache’s cash expenditures related to upstream capital activity and is consistent with how we plan our capital budget.

 

     For the Quarter Ended      For the Year Ended  
     December 31,      December 31,  
     2020      2019      2020      2019  

Costs incurred in oil and gas property:

           

Acquisitions

           

Proved

   $  —        $ 1      $ 7      $ 8  

Unproved

     1        14        4        57  

Exploration and development

     256        533        1,200        2,464  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Costs incurred in oil and gas property

   $ 257      $ 548      $ 1,211      $ 2,529  
  

 

 

    

 

 

    

 

 

    

 

 

 

Reconciliation of Costs incurred to Upstream capital investment:

           

Total Costs incurred in oil and gas property

   $ 257      $  548      $  1,211      $  2,529  

Asset retirement obligations settled vs. incurred—oil and gas property

     (22      110        (5      153  

Capitalized interest

     —          (8      —          (32

Exploration seismic and administration costs

     (14      (16      (63      (129

Less noncontrolling interest—Egypt

     (32      (44      (155      (155
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Upstream capital investment

   $ 189      $ 590      $ 988      $ 2,366  
  

 

 

    

 

 

    

 

 

    

 

 

 

Reconciliation of Net cash provided by operating activities to Cash flows from operations before changes in operating assets and liabilities

Cash flows from operations before changes in operating assets and liabilities is a non-GAAP financial measure. Apache uses it internally and provides the information because management believes it is useful for investors and widely accepted by those following the oil and gas industry as a financial indicator of a company’s ability to generate cash to internally fund exploration and development activities, fund dividend programs, and service debt. It is also used by research analysts to value and compare oil and gas exploration and production companies and is frequently included in published research when providing investment recommendations. Cash flows from operations before changes in operating assets and liabilities, therefore, is an additional measure of liquidity but is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing, or financing activities.

 

     For the Quarter Ended      For the Year Ended  
     December 31,      September 30,      December 31,      December 31,  
     2020      2020      2019      2020      2019  

Net cash provided by operating activities

   $  498      $  304      $  778      $  1,388      $  2,867  

Changes in operating assets and liabilities

     2        97        42        186        3  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Cash flows from operations before changes in operating assets and liabilities

   $ 500      $ 401      $ 820      $ 1,574      $ 2,870  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Page 7


APACHE CORPORATION

OIL & GAS RESERVES INFORMATION

For the Year Ended December 31, 2020

 

OIL (Mbbl)         
     U.S.     Egypt1     North Sea     Total1  

Balance - Dec 31, 2019

     324,861       114,404       111,761       551,026  

Extensions and Discoveries

     17,858       17,855       5,275       40,988  

Purchases

     —         —         —         —    

Revisions

     (69,247     2,541       (4,756     (71,462

Production

     (32,299     (27,591     (18,441     (78,331

Sales

     (8,721     —         —         (8,721
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance - Dec 31, 2020

     232,452       107,209       93,839       433,500  
  

 

 

   

 

 

   

 

 

   

 

 

 
NGL’s (Mbbl)         
     U.S.     Egypt1     North Sea     Total1  

Balance - Dec 31, 2019

     182,363       757       2,977       186,097  

Extensions and Discoveries

     11,435       97       312       11,844  

Purchases

     —         —         —         —    

Revisions

     (469     264       (207     (412

Production

     (27,133     (276     (709     (28,118

Sales

     (456     —         —         (456
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance - Dec 31, 2020

     165,740       842       2,373       168,955  
  

 

 

   

 

 

   

 

 

   

 

 

 
GAS (MMcf)         
     U.S.     Egypt1     North Sea     Total1  

Balance - Dec 31, 2019

     1,060,978       458,086       122,933       1,641,997  

Extensions and Discoveries

     60,965       83,718       8,140       152,823  

Purchases

     —         —         —         —    

Revisions

     215,166       (19,849     (33,541     161,776  

Production

     (205,594     (100,348     (21,032     (326,974

Sales

     (2,255     —         —         (2,255
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance - Dec 31, 2020

     1,129,260       421,607       76,500       1,627,367  
  

 

 

   

 

 

   

 

 

   

 

 

 
TOTAL BOE (Mboe)         
     U.S.     Egypt1     North Sea     Total1  

Balance - Dec 31, 2019

     684,053       191,508       135,227       1,010,788  

Extensions and Discoveries

     39,454       31,905       6,944       78,303  

Purchases

     —         —         —         —    

Revisions

     (33,854     (502     (10,554     (44,910

Production

     (93,698     (44,592     (22,655     (160,945

Sales

     (9,553     —         —         (9,553
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance - Dec 31, 2020

     586,402       178,319       108,962       873,683  
  

 

 

   

 

 

   

 

 

   

 

 

 

Proved developed reserves:

        

Oil (Mbbls)

     206,936       95,981       86,566       389,483  

NGL’s (Mbbls)

     150,599       716       2,053       153,368  

Gas (Mboe)

     175,459       68,173       11,360       254,992  
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance - Dec 31, 2020 (Mboe)

     532,994       164,870       99,979       797,843  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) 

Includes reserves attributable to noncontrolling interest in Egypt.

 

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